This week on Planet Bitcoin - 16 September 2016

Friday 16 September 2016

TL;DR CRUNCH!

Well, things were ticking along nicely there for a while, with the recovery back above $600 and beyond. In the early part of the week, bitcoin stabilised above $620 and it looked like things were going to settle back to where they were before the Bitfinex hack that temporarily destroyed the market’s confidence. Then four days ago, just as the market was thinking about tackling the $630 mark, a massive sell came in and dropped the price $30 dollars almost instantly.

Chart

The effect can be seen on the chart: a single red candle that is still evident on the 5-minute scale. That clearly points to one very big seller, or potentially a number of co-ordinated asks. The whale placed a big sell, in what is after all still quite a low-liquidity market compared to conventional assets. That in turn could have triggered margin calls for traders who were leveraged long, wiping them out and compounding the fall. Cynics might wonder whether the same whale or whales took advantage of the panic to buy back in at a lower price; more seasoned bitcoin traders will probably shrug and recognise such market manipulation is the price of doing business. We’re still at a point in bitcoin’s evolution where single, large traders can make big waves on the markets, and until bitcoin becomes a more mature market this kind of thing will inevitably happen.

Although the price briefly dipped below $600 again, traders have obviously concluded that those prices represented a buy and fair value was a few dollars above that line. Since then, bitcoin has been trading in a channel between about $605 and $610. Probably more than a few traders are feeling burned as a result of the last week, and are sitting out for a while.

Around the bitworld

Notable risers among the alts include Ripple, up around 30% on the week; gold asset DigixDAO, up around the same; and cloud blockchain service Stratis, up over 40%. Steem and Monero have both taken a hit - after impressive rises, that’s a predictable event as profit-taking occurs.

Back in bitcoinland, mining has got tougher since block rewards were sliced in half, but new miners are still interested. Antivirus mogul John McAfee has confirmed his new facility in Washington is managing 2.6 petahash, bringing in around 90 bitcoins a month. Difficulty continues to rise and stands at an all-time high of 226 billion.


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